Verdict first

Posted by Marc Hodak on February 26, 2009 under Scandal | Read the First Comment

The Wall Street Journal continues its descent into tabloid territory.  Below a poorly cropped picture of Paul Greenwood mashed up against that of strutting horse was the following caption:

Money manager Paul Greenwood, left, [as if anyone would mistake the horse for a Greenwood] after his arrest Wednesday.  Authorities claim he and associate Stephen Walsh spent lavishly on horses, houses, and collectible teddy bears.  Right, Mr. Greenwood’s horse farm [because we’re still having trouble differentiating Greenwood from the horse] boasts show ponies that can fetch more than $100,000, according to his web site.

Nota bene:  the authorities weren’t quoted as claiming that the money used to buy this stuff was robbed from customers.  No, they’re being quoted as saying it was spent lavishly.  Last time I checked, spending lavishly was not a crime, which brings up an interesting question about scandal reporting:  why are authorities being quoted on how the money was spent versus how it was acquired?

To appreciate the answer, one must understand the stages of scandal prosecutions.  Every scandal has a target of outrage.  That target is tried first in the court of public opinion before being tried in a court of law (if they actually get there).  In the court of public opinion, it’s much easier to convict someone for being rich than for being a fraud.  The Wall Street Journal is basically pronouncing a verdict without a trial, using pronouncements of “authorities” as its cover to say what it wanted to say.

It is also helping the government prepare for a prosecution.  Fortunately, a court of law has slightly higher standards than the court of public opinion.  “Too rich to be innocent” is not quite a high enough hurdle.  The first Tyco prosecution was almost entirely based on lurid tales of $6,000 shower curtains or umbrella stands, a $2 million birthday party, and various mistresses.  I was there, and the incompetent prosecutors resembled chimps banging on pots with their disjointed presentation of loudly irrelevant facts.  They ended up confusing the jury, and failed.  It took a second, much more streamlined prosecution focused on what the defendants actually did to their shareholders, to get convictions.

But the real trial will come later.  First, the public trial and the verdict.